Sunday, February 26, 2012

3SBio: Diabetes is a big problem in China, Bolton explained, pointing out that in part this is due to the country's population becoming increasingly wealthy and altering its diet from rice-based to meat-based as a result.
3SBio is a US-listed company that profits from making drugs used to counteract the side-effects of kidney dialysis, a treatment offered to patients who are also experiencing kidney problems.
'The number of people being treated is increasing as there is more government finance and this [company] is a leader in the field,' Bolton explained. 'You're paying about 12x [earnings] for something that's growing well in the 20s, which I think is pretty attractive,' the manager added.

Kingdee, the new Sage: 'IT services is an area I'm very excited about,' Bolton said. 'Kingdee is in the business of accounting package software and looks very similar to a company in the UK called Sage,' Bolton said. Bolton first looked at Sage (SGE.L) as manager of the Fidelity UK Special Situations fund years ago when it was a fledgling enterprise. 'It is now a FTSE company, and has been a very good place to be,' he said. One of the things I look for is businesses like those I have invested in the west, but where you can buy them at a much earlier stage in their development.'

Wuxi Pharmatech: Wuxi is a laboratory and clinical trial company that works for large pharmaceuticals. Its clientele is largely international, and it offers its customers cheap but sophisticated scientific trials in China that can help keep margins down.

'Wuxi is a leader in that. The biggest company in that field is US-listed and is at 17x earnings. Wuxi is growing at about 15% - twice that of the leader - and trades at 12x,' Bolton said. 'You can buy faster growth at a cheaper valuation and that's the sort of thing that I really like in China.'

Rexlot The Chinese love of gambling is well known. '[There's] a welfare lottery, which raises money for welfare causes, and a sports lottery that raises money for sports. The total size of these is about two-thirds the size of Macau [the well known gambling haven], so it's a sizable business,' Bolton said. 'Rexlot is very interesting, on 8x earnings and growing at about 25% per annum. What they are going to introduce soon in China is the ability to gamble on your mobile phone and I think that could make even faster growth.'